Yahoo Finance How a big inheritance could actually cost you money
It may seem like a welcome windfall, but receiving a poorly planned inheritance can cause a serious headache.
And concerningly, a lot of Australians don’t understand this, Australian Unity Trustees’ director of estate planning Anna Hacker told Yahoo Finance.
In one instance, a woman was granted a home as part of her inheritance. While that sounds like an incredible gain, it actually came with a major hurdle.
“She inherited a property that their mum still lived in from a father but because she was on the title, that was classed as her first home and she didn’t get the first home owners’ grant,” Hacker explained.
“She didn’t get all of these other things because technically she owned a house, but her mum lived in it.”
This kind of trouble is something that some people simply “don’t realise”, she said.
But the bigger issue for a lot of families is the payment of Centrelink benefits.
With this in mind, more families are beginning to factor Centrelink benefits into the distribution of assets as poorly designed inheritances can disrupt the payments.
“Even if the recipient was only getting limited Centrelink payments it might be the healthcare card that they really care about,” she explained.
“So that could actually mean they’re having to pay for expensive medication, and especially if they’re getting a lot of it, that could be a huge impact on someone and they really don’t want to lose that healthcare card.”
It can also throw off pension entitlements. And like Centrelink payments, for a lot of Australians the benefit of the pension extends far beyond the cash payments, explained elder law expert Brian Herd for CRH Law.
“In the end, it may be that the advice – ‘just suck it up’ – is best unless your mojo in retirement is to extract every last cent of government largesse,” he suggested.
“And, dare I say, that inheritance may just go some way to giving you a better time in aged care such as being able to stay at home longer.”
For those who wish to mitigate the risks however, the good news is there’s a simple solution.
Hacker suggests building your will well in advance of when you think it will be needed and speaking to a qualified estate planner.
She explained that while Australians can use will-kits, the benefit of an estate planner is the advice around the will, which can go some way to addressing the above challenges.
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